Self-directed IRAs are able to use a plethora of alternative investments to build retirement income. Alternative assets include real estate, private equity, futures and forex trading, farm land, timberland, private mortgages, and much more. However, you can also invest in stocks in a self-directed IRA.
The main reason people use self-directed IRAs is because of the incredibly large pool of investments that are allowed in them. Combined with the fact that account owners get to choose which assets they want to acquire makes these plans mighty attractive to those who want control over their retirement funds. They choose assets by drawing on their knowledge and expertise to guide their decisions. But, even though alternatives are the most popular assets in self-directed plans, account owners can also use traditional investments, such as stocks, to grow retirement income.
Outside the few assets that are not permissible in IRAs (e.g., collectibles and life insurance) account owners have nearly endless options to choose. The key to self-direction is to invest in what you know best. So, if you are familiar with Wall Street and want to take advantage of the peaks the stock market is experiencing now—you can.
Adding stocks in a self-directed IRA will help you achieve diversity that is critical to the success of your retirement plan. The stock market has climbed to historic highs since Trump was elected. There are some areas that experts are predicting continued growth such as infrastructure and bank stocks, to name a few.
We are in the midst of a bull market, which can be advantageous to those who invest in stocks that perform well. The market pushed past $20 trillion in mid-February as investors gained confidence in Trump’s proposed tax cuts giving the economy a boost—and as of the date of an article by MarketWatch published on March 1, has continued to reach historical gains.
There you have it—yet another asset allowed in a self-directed IRA. And while the main reason people choose to self-direct is to have access to alternative investments, like real estate, private lending options and much more, that doesn’t mean you can’t combine the alternatives with traditional assets to build wealth for retirement.